New GOP Health Plan Is White Flag in Obamacare Repeal Fight

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A blog about business and economics.
Jan. 27 2014 4:25 PM

The End of the Beginning on Obamacare Repeal

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Sen. Richard Burr

Photo by Mark Wilson/Getty Images

Sens. Tom Coburn, Richard Burr, and Orrin Hatch rolled out an Obamacare replacement plan today that I think offers us a good window into how the health care debate is evolving on Capitol Hill. I recommend Philip Klein's rundown in the Washington Examiner for a clear description of the details, but the view from 50,000 feet is basically that this is the Republican Party stepping away from the idea that it's going to repeal the Affordable Care Act.

Of course, in its official operations the way the bill works is to first repeal Obamacare and then replace it with a new law that happens to retain some of Obamacare's most popular features. For example, "insurers would be barred from imposing lifetime limits on medical claims and required to allow individuals to remain on their parents’ policies until the age of 26." And rather than eliminate the Affordable Care Act's restrictions on insurers charging older people higher premiums than younger people, the senators would simply make the restrictions a bit less strict. And while Coburn/Burr/Hatch don't want to altogether ban insurers from refusing to cover people with pre-existing conditions, they "would require insurers to offer coverage to anybody who has applied as long as they have maintained continuous coverage, regardless of whether they are switching health plans or shifting from employer-based health care to the individual market."

In other words, rather than scrapping the main pillars of the Affordable Care Act entirely, they would partially roll them back.

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Conversely, while conservative wonks have traditionally favored a big bang approach to eliminating the massive tax subsidies that keep employer-provided insurance together, "in consideration of the backlash against the way that Obamacare has disrupted people’s insurance coverage, the new GOP proposal would maintain the employer health insurance bias."

Last but by no means least "[i]nstead of expanding Medicaid, as Obamacare does, the Coburn-Burr-Hatch proposal would reform it to give more flexibility to states and allow Medicaid beneficiaries the option of using their tax credit to purchase private coverage."

I don't think the plan as written is fully sound from a structural viewpoint. In particular, the continuous coverage rule is the kind of thing that's easy to write down as a single sentence in a column but difficult to turn into a clear piece of legislation. Turning that into a workable regulation, especially in a world where which insurance plans are available changes from time to time and place to place, would be a whole giant process and you'd have to evaluate a specific proposal. But the key thing about this is that it doesn't envision radically remaking the health care system along free market lines. Relatively to the status quo that existed in 2009, it would constitute modestly remaking the health care system along liberal lines. Most of all, as a political document it reflects an appreciation of the overwhelming political power of the status quo. You can't kick those 25-year-olds off their parents' insurance plan. You can't deny the currently insured the peace-of-mind that comes from knowing that getting sick won't make them uninsurable. You can't change tax policy in a way that's too disruptive. And this plan isn't going to pass in 2014. It's not going to pass in 2015. And it's not going to pass in 2016. By 2017, Medicaid expansion and subsidized exchange plans will be the new status quo. Are the Coburns, Burrs, and Hatches of 2017 really going to be willing to blow that up?

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.